CANADA FX DEBT-C$ gains against greenback after mixed jobs data

Reuters Staff

3 Min Read

(Adds strategist comment, closing figures)
* Canadian dollar ends at C$1.2090 or 82.71 U.S. cents
* Bond prices higher across the maturity curve
By Solarina Ho
TORONTO, May 8 (Reuters) - The Canadian dollar finished
stronger against the greenback on Friday after initially
gyrating a cent to session highs and lows as investors digested
April employment data from the United States and Canada.
The Canadian economy lost 19,700 jobs, far greater than the
5,000 positions economists had expected to disappear, with
losses in part-time work offsetting gains in full-time
positions. The unemployment rate stood at 6.8 percent.
In the United States, job growth rebounded 223,000 and the
unemployment rate dropped to a near seven-year low of 5.4
percent, signs that the economy was picking up after a
lackluster first quarter.
"The way the market initially reacted to both data points
was really a headline reaction," said Brad Schruder, director,
foreign exchange sales at BMO Capital Markets. "But when you dug
into details, you saw that in both cases, the results were
relatively positive."
The Canadian dollar ended the session at C$1.2090
to the greenback, or 82.71 U.S. cents, stronger than the Bank of
Canada's official close of C$1.2120, or 82.51 U.S. cents.
Immediately after the data was released, the currency
rallied to a session high of C$1.2046 before retreating to a
session low of C$1.2145.
The Canadian dollar gained just over half a percent for the
week. It has had trouble breaking through C$1.1940, however, the
loonie's strongest level since before the Bank of Canada's
surprise rate cut in January.
"(It) should definitely be cause for concern for U.S. dollar
buyers. There's a lot of technical reasons to think that would
hold," said Schruder. He said the market was seeing a technical
set up for a rebound to the C$1.23 to C$1.2350 range.
In the coming weeks, moves in the fixed income market will
be closely watched. Comments and decisions from the European
Central Bank could draw more attention than usual, with the
Canadian dollar getting pulled along with global currency flows,
said Schruder.
Canadian government bond prices were higher across the
maturity curve, with the two-year price up 3.5
Canadian cents to yield 0.662 percent and the benchmark 10-year
rising 47 Canadian cents to yield 1.698 percent.
The Canada-U.S. two-year bond spread was 9.00 basis points,
while the 10-year spread was -44.4 basis points.
(Editing by Nick Zieminski and Grant McCool)